The European Commission has published a revised version of the so-called ‘Cinema Communication’. The communication lays down assessment criteria for state aid in the film industry, including the production of films and other audio-visual works.

Background: EU law on state aid

To protect the free movement of goods and services in the EU, Member States are prohibited under EU law to grant aid, which distorts or threatens to distort competition and trade between Member States.

However, the European Commission is permitted to exempt certain types of state aid from this prohibition.

One such exemption applies to state aid designed to promote culture, provided the aid does not affect competition and trading conditions to such an extent that the common interest would be affected.

Cinema Communication

The European Commission’s Communication on State aid for films and other audio-visual works contains important modifications to the previous framework for state subsidies in the culture industry.

Joaquin Almunia, European Commission Vice President responsible for competition stated:

“The objective of these revised rules is to encourage vibrant audio-visual creation in Europe while preserving cultural diversity everywhere in the EU. They provide a common EU framework for the state support granted by Member States which takes into account the European dimension of the audio-visual sector and seeks to ensure its continued viability and competitiveness.”

The scope of audio-visual projects eligible to receive state aid has also been widened. Also, co-productions funded by more than one Member State will be able to receive up to 60% of the production budget in state aid.

Member States will be permitted to oblige recipients of state aid to spend up to 160% of the amount granted in their territory. Member States may also require that part of the production is carried out in their territory, regardless of the amount of state aid granted. However, this specific part of production may not exceed exceed 50% of the production budget. The amount spent to fulfil this territorial obligation cannot exceed 80% of the production budget.

The Media Board Berlin-Brandenburg GmbH believes that the new criteria promote a sensible framework for state aid in the film industry in Europe. Director Kirsten Niehuus expressed optimism that future funding for films ‘Made in Berlin Brandenburg’ is secure.

According to the European Commission’s estimates, around €3 billion is made available by EU Member States to support the film industry. Two billion is provided in the form of grants and soft loans and €1 billion is provided through tax incentives. About 80% of this funding is allocated to film production. The Member States that provide the majority of the funding are France, the UK, Germany, Italy and Spain.

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